In this case it was a profitable business and the guy was also hiring locals. There are probably tax considerations and I would say this is breaking the spirit of the law.
Those shared work spaces could be subsidized to encourage locals so taking advantage of that is problematic.
It would be different if he was just building his product, no business entity and no local hires...
At any rate, there's some fine line where an activity that could otherwise be described as a hobby becomes work. It's the actual activity + intent + context + judgement of the authorities that matters... Presumably when you essentially establish residence, get paid, hire and manage other people, that line has been crossed.
Those shared work spaces could be subsidized to encourage locals so taking advantage of that is problematic.
It would be different if he was just building his product, no business entity and no local hires...